The Blackmailer’s Paradox

Prof. Robert Aumann is an Israeli-American game theorist who won the Nobel Prize for Economics in 2005. In an interview with an Israeli newspaper in 2010, he described "the blackmailer's paradox," and its impact on Arab-Israeli negotiations:

"Someone offers Reuven and Shimon $1,000 if they can manage to agree on how to split the money between them. Reuven says to Shimon: 'Great, let's split it half and half.' Shimon says:' No. I'm not leaving here with less than $900. You will get $100. Take it or leave it.' Reuven says to him: 'Be rational. Why should you get more than me?' Shimon

says: 'Rational or not, do what you want. Either I leave here with $900 or with nothing. You decide.'

Reuven thinks and says: 'Okay, $100 is money nonetheless. What am I going to do with this irrational mule? I myself am rational and will take the $100. I need to advance my goal of getting as much money as possible, and my choice is between zero and $100. One hundred is still something.'

"What is the paradox? That the irrational person gets more than the rational person."

What's interesting about President Obama's refusal to negotiate with Republicans over the debt ceiling is that he's essentially adopted the Palestinian negotiating strategy. In effect, he is claiming that his demands are sacred -- because the good faith and credit of the United States is at stake -- and that Republicans must accept them.

In a rational world, public opinion would unequivocally denounce President Obama for his intransigence. In the real world, President Obama's demands, like Palestinian demands, are accepted at face value, and the pressure mounts on Republicans to accommodate them. And since every popular narrative must have a villain, the mainstream media and the Washington punditocracy have focused on the Tea Party -- which has become the

American equivalent of the Israeli settler movement.

Can Republicans escape the blackmailer's paradox? Aumann offers three suggestions:

1. Be willing to forego an agreement. In Reuven's case, that entails a willingness to leave the room empty-handed rather than acquiesce to Shimon's blackmail. In Israel's case, it means a willingness to see the "peace process" fail -- even if Israel gets the blame. And in the case of Republicans, it means facing up to the likelihood that if President Obama won't negotiate, the debt ceiling won't be raised.

2. Recognize that you are engaged in a protracted negotiation. Reuven assumed that he and Shimon were engaged in a single encounter, rather than one in a series of encounters. Had he borne in mind the likelihood of future negotiation, he would have realized that a willingness to leave the room empty-handed today would make it more likely to reach an agreement with Shimon the next time they met. Similarly, because Israel and the Palestinians are engaged in a protracted negotiation, letting one round fail would actually facilitate future success.. And in the current Obama-Republican confrontation, Obama was undoubtedly emboldened to refuse to negotiate because he saw how Republicans abandoned their long-held refusal to raise taxes during the previous fiscal cliff negotiations. If Republicans don't cave again, they'll enhance their credibility and will actually improve prospects for a long-term deal.

3. Maintain faith in the justness of your cause. From Israel's perspective, a major tragedy of the "peace-process" has been the success of the Israeli Left -- at least as destructive as the American Left -- in convincing much of the Israeli public that Israel has no legitimate claim to land conquered in the 1967 war. Consequently, successive Israeli governments found it increasingly difficult to resist Palestinian demands for full withdrawal. In the Republican case, the overwhelming majority of Republican lawmakers believe that America's future hinges on finally getting spending under control. But will that faith withstand constant pounding by the President and his supporters? Only time will tell.

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